KraneShares is set to launch an S&P China 500 ETF amid proposals to merge the new strategy with an existing product from ICBC Credit Suisse Asset Management, ETF Stream can reveal.
In a shareholder notice, ICBC Credit Suisse AM is inviting shareholders to vote in favour of merging the $41m ICBCCS S&P China 500 UCITS ETF (CHIN) with the newly-created KraneShares ICBSS S&P China 500 UCITS ETF, effective 13 October.
CHIN is the “last remaining” ETF on ICBC Credit Suisse AM’s Luxembourg platform.
The firm said an extraordinary general meeting will be held on 22 September to vote on the merger with the outcome published in a notice on 27 September.
Luxembourg’s regulator – the Commission de Surveillance du Secteur Financier (CSSF) – confirmed on 22 August it has no objection to the merger.
ICBC Credit Suisse AM said the ETF would benefit from KraneShares’ distribution network across the EU and economies of scale, given it will go from being a sole ETF on a platform to one of many sub-funds on the KraneShares Irish Collective Asset management Vehicle (ICAV).
If the merger is approved, the ETF’s total expense ratio (TER) will remain unchanged at 0.55%.
The ETF will continue to track the S&P China 500 index – capturing the 500 largest and most liquid Chinese onshore and offshore listed companies – with investment management continuing to be delegated to ICBC Credit Suisse AM.
However, KraneShares’ new ETF differs in being able to lend out up to 50% of its underlying securities and invest in variable interest entity structures.
The reference currency of the ETF will also change from Chinese yuan to US dollars.
Operationally, the merger would also see Waystone replace Carne Global Fund Managers as the ETF’s management company and SEI Investments replace State Street as depository.
Subject to approval, ICBC Credit Suisse AM said shareholders have until midday Luxembourg time on 27 September to redeem their shares if they do not want to participate in the merger.
This marks just the latest collaboration between the firms, with ICBC Credit Suisse AM currently acting as sub-investment manager on the $3m KraneShares ICBCCS SSE STAR Market 50 Index UCITS ETF (KSTAR).